/raid1/www/Hosts/bankrupt/CAR

/raid1/www/Hosts/bankrupt/CAR_Public/011017.mbx C L A S S A C T I O N R E P O R T E R Wednesday, October 17, 2001, Vol. 3, No. 203 Headlines ART TECHNOLOGY: Bernstein Liebhard Initiates C.D. CA Securities Suit BROADCOM CORPORATION: Spector Roseman Lodges C.D. CA Securities Suit CALIFORNIA AMPLIFIER:Spector Roseman Lodges Securities Suit in C.D.CA CHRONIMED INC.: Denies Minnesota Securities Suit Allegations CRAYFISH COMPANY: Pomerantz Haudek Commences S.D. NY Securities Suit E.PIPHANY INC.: Bernstein Liebhard Commences S.D. NY Securities Suit EL SITIO: Marc Henzel Commences Securities Suit in S.D. New York FREEMARKETS INC.: Faruqi Faruqi Initiates Securities Suit in W.D. PA GLOBALSTAR TELECOMMUNICATIONS: Shalov Stone Files NY Securities Suit INTERNET SECURITY: Wolf Haldenstein Lodges Securities Suit in N.D. GA INTERTRUST TECHNOLOGIES: Marc Henzel Lodges Securities Suit in S.D.NY JNI CORPORATION: Faruqi Faruqi Raises Securities Suit in S.D. CA KEITHLEY INSTRUMENTS: Spector Roseman Initiates Securities Suit in OH K-TEL INTERNATIONAL: MN Securities Suit Dismissed, Appeal Pending LABOR READY: West Virginia Court Upholds Arbitration With Workers LOUDCLOUD INC.: Berman De Valerio Commences Securities Suit in S.D.NY MULTEX.COM: Faruqi Faruqi Initiates Securities Suit in S.D. New York NANOPHASE TECHNOLOGIES: Settles Securities Suit For $800T In Illinois PNV INC.: Bernstein Liebhard Commences Securities Suit in S.D. NY PURCHASEPRO.COM: Faruqi Faruqi Commences Securities Suit in Nevada QUIETFLEX MFG CO.: 80 Employees Allege Racial Bias in Texas Suit SIRIUS SATELLITE: Calls Securities Suit "Frivolous" and "Without Merit" TURNSTONE SYSTEMS: Specter Roseman Initiates N.D. CA Securities Suit WIRELESS FACILITIES: Marc Henzel Commences Securities Suit in S.D. NY WINSTAR COMMUNICATIONS: Spector Roseman Initiates NY Securities Suit ********* ART TECHNOLOGY: Bernstein Liebhard Initiates C.D. CA Securities Suit -------------------------------------------------------------------- Bernstein Liebhard and Lifshitz LLP commenced a securities class action lawsuit on behalf of purchasers of Art Technology Group, Inc. (NASDAQ: ARTG) securities between January 25, 2001 and April 2, 2001. The case is pending in the United States District Court for the Central District of California and names as defendants, the Company and its co- founders, Chief Executive Officer Jeet Singh and Chairman of the Board, Joseph Chung. The complaint charges defendants with violations of sections 10(b) and 20(a) the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The defendants allegedly issued to the investing public false and misleading information that materially misstated the Company's condition and prospects. Moreover, the Company failed to disclose material information necessary to make its prior statements not misleading. As a result of these false and misleading statements, the Company's stock price was artificially inflated throughout the class period. For more information, contact Ms. Linda Flood, Director of Shareholder Relations by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E-mail: ARTG@bernlieb.com or visit the firm's Website: www.bernlieb.com BROADCOM CORPORATION: Spector Roseman Lodges C.D. CA Securities Suit -------------------------------------------------------------------- Spector, Roseman & Kodroff, P.C. commenced a class action lawsuit in the United States District Court for the Central District of California against Broadcom Corporation (NASDAQ:BRCM). The suit was filed on behalf of investors who purchased Broadcom Corporation securities during the period from October 18, 2000 through February 26, 2001. The complaint charges the Company and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint also alleges that the defendants made positive but false statements about the Company's results and business, while concealing information about agreements with certain companies it acquired. These statements essentially resulted in the Company buying its own revenues. As a result, Company stock traded at artificially inflated levels, permitting the three individual defendants to sell $45.8 million worth of their Company stock. Then, on February 2001, The Wall Street Journal published an article on the Company entitled "Warrant Deals Raise Concerns on Broadcom," in which analysts and accounting experts questioned the ``legitimacy'' of the transactions and termed the agreements "troubling". The Company's stock immediately dropped, falling 16% to $53, before closing at $53.625 on February 27, 2001, and falling to $49.25 on February 28, 2001. For more information, contact Robert M. Roseman by Phone: 888-844-5862 (toll-free) by E-mail: classaction@spectorandroseman.com or visit the firm's Website: www.spectorandroseman.com CALIFORNIA AMPLIFIER:Spector Roseman Lodges Securities Suit in C.D.CA --------------------------------------------------------------------- Spector, Roseman & Kodroff, P.C. raised a class action lawsuit in the United States District Court for the Central District of California against California Amplifier, Inc. (NASDAQ: CAMP). The suit was brought on behalf of purchasers of California Amplifier stock during the period from April 7, 2000 through March 28, 2001, inclusive. The complaint charges the Company with violations of the Securities Exchange Act of 1934. In March 2001, the Company announced that it would restate its fiscal 2000 financial statements because of accounting misstatements. In a press release, the Company revealed that during preparation for the Company's fiscal year 2001 audit examination, their corporate controller abruptly resigned. The controller revealed in a letter that he made certain adjustments to the Company's accounting records that caused a reduction in recorded expenses which may have resulted in overstating net income for the fiscal year ended February 26, 2000 by as much as $2.2 million, or $.18 per basic share. The Company said that it was actively investigating the circumstances reported by the controller but has not yet been able to interview the controller fully. As a result, they were unable at this time to reach any definitive conclusions as to the exact expenses or fiscal year 2000 quarters that are affected by this alleged overstatement. Due to these developments, the previously scheduled release of earnings for the fourth quarter and the fiscal year ended March 3, 2001 on April 19, 2001 was postponed to a future date to be announced. On this news, trading in the Company's shares was halted at $5.03 - or more than 90% lower than the class period high of $59.25. For further details, contact Robert M. Roseman by Phone: 888-844-5862 (toll-free) by E-mail: classaction@spectorandroseman.com or visit the firm's Website: www.spectorandroseman.com CHRONIMED INC.: Denies Minnesota Securities Suit Allegations ------------------------------------------------------------ Chronimed, Inc. denied the allegations in several securities class action suits filed against them in the United States District Court for the District of Minnesota. The first suit commenced in June 2001, naming as defendants the Company and certain of their current and former officers and directors. The suit alleged that the defendants violated Section 10(b) of the Securities Exchange Act of 1934 and Rule 10(b)-5 promulgated thereunder, and that the individual defendants violated Section 20(a) of the Exchange Act. Eight other lawsuits asserting claims identical to the Barclay case were brought by other plaintiffs during the weeks following the initial filing. The nine lawsuits have been consolidated into a single case. The suits generally allege that the Company made false and misleading statements about their financial statements in violation of the securities laws. The alleged violations arise out of the requirement to restate previously issued financial statements. The Company asserted in a regulatory filing that the claims are "wholly without merit." CRAYFISH COMPANY: Pomerantz Haudek Commences S.D. NY Securities Suit -------------------------------------------------------------------- Pomerantz Haudek Block Grossman & Gross LLP filed a securities class action suit on behalf of purchasers of more than 4 million American Depository Shares arising out of the March 8, 2000 initial public offering by Crayfish Co., Ltd. through August 22, 2000, inclusive. The suit, filed in the United States District Court for the Southern District of New York, charges the Company of violating Sections 11, 12(a)(2) and 15 of the Securities Act of 1933. The Company allegedly misled investors by disseminating materially false and misleading information to the investing public concerning the Company's business prospects and materially overstating the Company's projected growth. For more details, contact Andrew G. Tolan by Phone: 1-888-4-POMLAW (1- 888-476-6529) (toll-free) by E-mail: agtolan@pomlaw.com or visit the firm's Website: www.pomerantzlaw.com. Those who inquire by e-mail are encouraged to include their mailing address and voice telephonic number. E.PIPHANY INC.: Bernstein Liebhard Commences S.D. NY Securities Suit -------------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP initiated a securities class action lawsuit on behalf of purchasers of E.piphany, Inc. (NASDAQ: EPNY) securities between September 21, 1999 and December 6, 2000. The case is pending in the United States District Court for the Southern District of New York and names as defendants, the Company and: (1) Roger S. Siboni, (2) Kevin J. Yeaman, (3) Eliot L. Wegbreit, (4) Credit Suisse FirstBoston Corporation, (5) Merrill Lynch, Pierce, Fenner & Smith, Incorporated, and (6) BancBoston Robertson Stephens, Inc. The complaint charges defendants with violations of the Securities Act of 1933 and the Securities Exchange Act of 1934 for issuing a registration statement and prospectus that contained materially false and misleading information and failed to disclose material information. The prospectus was issued in connection with the Company's initial public offering of 4,150,000 shares of common stock at $16.00 per share that was completed on September 21, 1999. The complaint alleges that the prospectus was false and misleading because it failed to disclose that: (i) the underwriter defendants' agreement with certain investors to provide them with significant amounts of restricted Company shares in the IPO in exchange for exorbitant and undisclosed commissions; and (ii) the agreement between the underwriters and certain of its customers whereby the underwriters would allocate shares in the IPO to those customers in exchange for the customers' agreement to purchase Company shares in the aftermarket at pre-determined prices. For further details, contact Ms. Linda Flood, Director of Shareholder Relations, by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E-mail: EPNY@bernlieb.com or visit the firm's Website: www.bernlieb.com EL SITIO: Marc Henzel Commences Securities Suit in S.D. New York ---------------------------------------------------------------- The Law Firm of Marc S. Henzel initiated a securities class action suit on behalf of purchasers of El Sitio, Inc. (NASDAQ: LCTO) common stock between December 9, 1999 and June 7, 2001, inclusive. The suit, filed in the United States District Court for the Southern District of New York, names as defendants the Company and: (1) Roberto Vivo-Chaneton, (2) Roberto Cibrian-Campoy, (3) Horacio Milberg, (4) Alfredo Jimenez de Arechaga, (5) Carlos Cisneros, (6) Michael Greeley, (7) Guillermo Liberman, (8) Ricardo Verdaguer, (9) Michael Levitt, (10) Sofia Pescarmona, (11) Credit Suisse First Boston Corporation, (12) Lehman Brothers Inc., (13) Merrill Lynch, Pierce, Fenner & Smith Incorporated, (14) Salomon Smith Barney, Inc., and (15) Wit Capital Corporation The defendants allegedly violated the federal securities laws by making material omissions in connection to the December 9, 1999 Company IPO The Company allegedly failed to disclose: (1) that some of the underwriters in the offering had solicited and received excessive and undisclosed commissions from certain investors; (2) in exchange for the excessive commissions, the underwriter defendants allocated Company shares to customers at the IPO price of $16.00 per share. To receive the allocations at $16.00, the underwriters' brokerage customers allegedly had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of El Sitio stock rocketed upward was intended to drive El Sitio's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying stock at the $16.00 IPO price and then selling it later for a profit at inflated aftermarket prices. Rather than allowing their customers to keep their profits from the IPO, the underwriters required their customers to ``kick back'' some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact, based on how much profit each investor had made from his or her IPO stock allocation. For more details, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202, Bala Cynwyd, PA 19004 by Phone: (610) 660-8000 or (888) 643- 6735 by Fax: (610) 660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 FREEMARKETS INC.: Faruqi Faruqi Initiates Securities Suit in W.D. PA -------------------------------------------------------------------- Faruqi and Faruqi LLP lodged a securities class action suit on behalf of all purchasers of FreeMarkets, Inc. (NASDAQ: FMKT) common stock between July 24, 2000 through April 23, 2001, inclusive. The suit was filed was commenced in the United States District Court for the Western District of Pennsylvania. The complaint charges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The complaint also alleges that the defendants issued a series of false and misleading press releases concerning the Company's financial condition and business prospects. The Company allegedly failed to properly account for a warrant that it had provided to one of its largest customers, Visteon Corporation during the class period. Moreover, the Company is charged with improperly accounting for its financial results for the second, third and fourth quarters and the year of fiscal 2000. As a result, the price of the Company's common stock was artificially inflated, allowing defendants to collectively sell millions of dollars worth of shares in personally held Company common stock. Later, the Company revealed that the Securities and Exchange Commission staff had informed the company that its payments from Visteon should not be classified as revenue, but as money paid for the warrant. As a result, the company said it would amend its financial statements to eliminate all the revenue it had received from Visteon during the class period. In response, the Company's stock price fell from a close of $10.29 per share on April 23, 2001 to $9.30 on April 24, 2001, significantly down from its class period high of $92.063 on September 5, 2001. For further details, contact Anthony Vozzolo by Mail: 320 East 39th Street, New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E-mail: avozz@faruqilaw.com or visit the firm's Website: www.faruqilaw.com GLOBALSTAR TELECOMMUNICATIONS: Shalov Stone Files NY Securities Suit -------------------------------------------------------------------- Shalov, Stone and Bonner LLP commenced a securities class action against Globalstar Telecommunications, Ltd. (Nasdaq (SC): GSTRF) in the United States District Court for the Southern District of New York. The suit, filed on behalf of purchasers of the Company's common stock from December 6,1999 to October 27,2000, names as defendants: (1) the Company, (2) Chief Executive Officer Bernard Schwartz; and (3) Parent company, Loral Space and Communications, Ltd. The suit alleges violations of Sections 10(b) and 20(a) of the Exchange Act, and Rule 10b-5 promulgated thereunder. The complaint alleges that: (i) the defendants made material misstatements or failed to state material facts about the Company's business and prospects; and (b) that Loral and Mr. Schwartz are secondarily liable for these alleged misstatements and omissions under Section 20(a) of the Exchange Act as alleged "controlling persons" of the Company For more details, contact Ralph M. Stone or Kenneth A. Ricken by Mail: 276 Fifth Avenue, Suite 704 New York, New York 10001 by Phone: (212) 239-4340 by Fax: (212) 686-8005 or visit the firm's Website: www.lawssb.com INTERNET SECURITY: Wolf Haldenstein Lodges Securities Suit in N.D. GA --------------------------------------------------------------------- Wolf Haldenstein Adler Freeman & Herz LLP commenced a securities class action suit on behalf of purchasers of Internet Security Systems (NASDAQ:ISSX) between April 5, 2001 and July 2, 2001, inclusive. The suit was filed in the United States District Court for the Northern District of Georgia, against the Company and certain of its officers. The complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the class period. These false and misleading statements artificially inflated the market price of the Company's securities. The complaint also alleges that during this period of artificial inflation, Company insiders sold thousands of their own shares of Company stock at artificially high prices for proceeds of over $18 million. The Company further took advantage of the artificially inflated share prices by using Company stock as currency to make acquisitions. In July 2001, however, defendants revealed that rather than achieving revenues of $64-67 million for the second quarter, the Company's revenues were actually in the $50-52 million range. Instead of earning $0.15 to $0.16 per share, the Company would actually suffer losses of up to $0.02 per share and ultimately, the Company announced losses of $0.13 per share for the quarter. As a result of these announcements, the Company's stock fell by more than 40% in one day, thus causing damages to class members. For more details, contact Fred Taylor Isquith, Gustavo Bruckner, Michael Miske, George Peters or Derek Behnke by Mail: 270 Madison Avenue, New York, New York 10016 by Phone: (800) 575-0735 by E-mail: classmember@whafh.com or visit the firm's Website: www.whafh.com. All e-mail correspondence should make reference to ISSX. INTERTRUST TECHNOLOGIES: Marc Henzel Lodges Securities Suit in S.D.NY --------------------------------------------------------------------- The Law Office of Marc S. Henzel initiated a securities class action suit on behalf of all persons and entities who purchased, converted, exchanged or otherwise acquired the common stock of Intertrust Corporation (NasdaqNM:ITRU) between October 26, 1999 and May 16, 2001 inclusive. The suit, filed in the U.S. District Court for the Southern District of New York, names the Company and certain of its current and former officers as defendants. The lawsuit asserts claims under Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The defendants allegedly issued and sold common stock pursuant to the IPO and secondary offering without disclosing that some of their underwriters had received excessive commissions from certain investors. The suit asserts that, in exchange for the excessive commissions, the underwriters allocated Company shares to customers at the IPO price of $18.00 per share. To receive the allocations at $18.00, the underwriters' brokerage customers allegedly had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Company stock rocketed upward was intended to drive Intertrust's share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to buy Company stock at the $18.00 IPO price and then sell it later for a profit at inflated aftermarket prices. The complaint further alleges that the Company was able to price the secondary offering of stock at an artificially high $35.00 per share (or $70.00 per pre-two-for-one-split share) due to the continued effects of the foregoing violations. Rather than allowing their customers to keep their profits from the IPO, the aforementioned defendant underwriters required their customers to ``kick back'' some of their profits in the form of secret commissions. These secret commission payments were sometimes calculated after the fact, based on how much profit each investor had made from his or her IPO stock allocation. The complaint further alleges that defendants violated the Securities Act of 1933 because their filings with the SEC contained material misstatements regarding the commissions that the underwriters would derive from the IPO and secondary offering. These filings also failed to disclose the additional commissions and ``laddering'' scheme discussed above. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202 Bala Cynwyd, PA 19004 by Phone: (610) 660-8000 or (888) 643-6735 by Fax: (610) 660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com JNI CORPORATION: Faruqi Faruqi Raises Securities Suit in S.D. CA ---------------------------------------------------------------- Faruqi and Faruqi LLP lodged a securities class action suit on behalf of all purchasers of JNI Corporation (NASDAQ: JNIC) securities between October 16, 2000 and January 24, 2001, inclusive. The suit, filed in the U.S. District Court for the Southern District of California, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The suit claims that defendants issued a series of materially false and misleading statements in SEC filings and press releases about its business prospects and results causing its stock to trade at artificially inflated levels. As a result of this inflation, the Company was able to complete a $382 million stock offering pursuant to a Registration Statement and Prospectus dated October 19, 2000. In November 2000, just two and one-half weeks after completing the offering, the Company admitted that it expected its sales of products designed to work with the SBus interface to decline. The Company's stock price declined in early November due to stories appearing in the press questioning the Company's competitive position and the pending resignation of its CEO. However, the defendants asserted there were no problems with the business and it was "business as usual". However, in January 2001, the Company shocked the market when it reported fourth quarter 2000 revenues of only $30.7 million, causing analysts to reduce 2001 EPS estimates to $0.80. As a result of this disclosure, the Company's stock dropped to as low as $20.00, 84% below the class period high, on volume of 4.4 million shares. For more information, contact Anthony Vozzolo by Mail: 320 East 39th Street, New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E-mail: avozz@faruqilaw.com or visit the firm's Website: www.faruqilaw.com KEITHLEY INSTRUMENTS: Spector Roseman Initiates Securities Suit in OH --------------------------------------------------------------------- Spector, Roseman & Kodroff, P.C. commenced a securities class action suit in the United States District Court for the Northern District of Ohio against Keithley Instruments, Inc. (NYSE: KEI). The lawsuit, filed on behalf of purchasers of the Company's stock of from January 18, 2001 through March 9, 2001, names Joseph P. Keithley, Chairman, President, and Chief Executive Officer, as co-defendants. The complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The defendants allegedly issued a series of material misrepresentations to the market during the class period regarding the demand for the Company's products and its expected revenues. Specifically, defendants stated that they anticipated that second quarter revenues would exceed those of the first quarter, in part, because of strong demand for the Company's products and the Company's record backlog. These statements were allegedly false and misleading because defendants knew that the Company was suffering from reduced new equipment orders, delays in scheduled deliveries and, with respect to semiconductor customers, canceled orders. The defendants' statements that their backlog was sufficiently large to overcome any softness in the economy and would lead to increased sales and earnings for the second quarter of 2001 were also materially false and misleading. The defendants allegedly knew but did not disclose that the backlog was not a true measure of sales revenue because the backlog was subject to cancellation or delayed shipment at the "buyer's" discretion. Finally, In March 2001, the defendants issued a press release announcing that sales and earnings for the first quarter of 2001 would be less than expected and 25% below the sales levels of the first quarter of 2001. The market's reaction to this announcement was immediate and punitive. Shares of Company stock closed on Monday, March 12, 2001, at $14.95, from a previous close on Friday, March 9, 2001, of $20.76, on reported volume of approximately 2.2 million shares. Prior to this disclosure, defendant Joseph Keithley sold shares of Keithley stock for proceeds of approximately $3.2 million, while other insiders sold shares for proceeds in excess of $5 million. For further detais, contact Robert M. Roseman by Phone: 888-844-5862 (toll-free) by E-mail: classaction@spectorandroseman.com or visit the firm's Website: www.spectorandroseman.com K-TEL INTERNATIONAL: MN Securities Suit Dismissed, Appeal Pending ----------------------------------------------------------------- The U.S. District Court for the District of Minnesota dismissed the class action suit against K-Tel International, Inc. for federal securities violation. The consolidated suit arose from twenty-three class actions commenced in various federal courts in November 1998 against the Company and certain officers and directors. The suits generally allege that the defendants issued of false and misleading statements during the period November 3, 1998 to 11:30 am on November 17, 1998. The Company's common stock was listed on the prestigious and highly liquid Nasdaq National Market. At least three weeks before November 17, 1998, the Company received a warning letter from Nasdaq that its common stock faced delisting from the National Market because it failed to meet NASDAQ's $4 million minimum asset requirement for continued listing. Despite the warning letter, for the next three weeks, the Company concealed this information and painted a misleadingly positive picture about K-tel, alleges the complaint. For example, in November 1998, defendants publicly touted two partnerships with household corporate names such as Playboy and Microsoft relating to the Company's new venture as an Internet music retailer but did not say a word about the possibility of delisting. These unqualified positive announcements resulted in skyrocketing prices for the Company's stock. After the Company belatedly revealed the possibility of delisting, the Company's stock price dropped 32% on that day, closing at $12.00, and on the next day fell an additional 17%. During the Class Period, the stock price had reached over $39 as a result of defendant's materially misleading representations and omissions. The suits were later consolidated in Minnesota court and in July 1999, the plaintiffs filed an amended consolidated class action complaint. In July 2000, the court dismissed the consolidated suit and denied the plaintiffs' request to amend the complaint in order to refile the complaint in the future. The plaintiffs promptly appealed the decision, and the Court of Appeals is scheduled to hear the matter this month. LABOR READY: West Virginia Court Upholds Arbitration With Workers ----------------------------------------------------------------- West Virginia Federal District Court blocked a class action filed by the AFL-CIO Building and Construction Trades Department against Labor Ready, Inc. (NYSE:LRW) The court upheld the Company's arbitration agreement with its workers in the wage and hour case and denied the plaintiff's attempt to add a number of the Company's customers as co-defendants in the case. The lawsuit, filed in August 2000, had sought to establish a class of "thousands of workers." However, despite 14 months of aggressive and costly advertising, the union was able to come up with only 64 workers to comprise the potential class. The Company's General Counsel Tim Adams lauded the decision, saying, "We've been convinced from the outset that the sole purpose of this lawsuit was to harass Labor Ready and its customers." "Clearly this is the union's campaign, not our workers' campaign," observed Adams. "It has been an expensive fiasco for the union." Labor Ready, Inc. is a provider of temporary manual labor to the light industrial and small business markets. LOUDCLOUD INC.: Berman De Valerio Commences Securities Suit in S.D.NY --------------------------------------------------------------------- Berman DeValerio Pease Tabacco Burt & Pucillo filed a securities class action suit against Loudcloud, Inc. (NASDAQ:LDCL) today, accusing the company of misleading the public during its Initial Public Offering. The lawsuit was filed October 15, 2001 in the U.S. District Court for the Southern District of New York on behalf of all investors who bought Loudcloud common stock between March 8, 2001 and May 1, 2001. The suit accuses the Company of failing to disclose important information in documents filed with the U.S. Securities and Exchange Commission (SEC) in connection with its Initial Public Offering. The suit alleges the Company didn't tell investors about its plans to substantially reduce its workforce and to restructure itself shortly after the public offering. The company also allegedly failed to disclose that its public offering was not raising funds sufficient for it to reach profitability and accomplish a planned expansion described in the prospectus. In addition, the documents filed with the SEC failed to mention the imminent cancellation of a major contract to which one of the underwriters was a party. Finally, the complaint accuses the company of making undisclosed sales of shares to insiders to prop up the IPO and keep the offering prices artificially high. The company's omissions resulted in investors overpaying for stock they bought during the IPO and up until the company revealed a restructuring plan on May 1, 2001. The lawsuit claims that Company insiders knew about the need for the restructuring at least as early as the IPO date. After the announcement, the Company's stock dropped from $6.43 a share on May 1, 2001 to $4.30 on May 7, 2001. At the time the complaint was filed, shares in the company were selling at $1.63. For more information, contact Michael G. Lange by Mail: One Liberty Square, Boston, MA 02109 by Phone: (800) 516-9926 by E-mail: law@bermanesq.com or visit the firm's Website: www.bermanesq.com MULTEX.COM: Faruqi Faruqi Initiates Securities Suit in S.D. New York -------------------------------------------------------------------- Faruqi and Faruqi LLP commenced a securities class action suit on behalf of all purchasers of Multex.com Inc. (NASDAQ: MLTX) securities between March 17, 1999 and December 4, 2000, inclusive. The suit was filed in the United States District Court for the Southern District of New York. The complaint charges that defendants violated Sections 11, 12 and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The suit also alleges that the Company's offering documents filed in connection with their initial public offering failed to disclose that certain underwriters in the offering had solicited and received additional, excessive and undisclosed commissions from certain investors. In exchange for these commissions, the underwriters allocated to those investors substantial blocks of Company shares issued in connection with the offering. To receive the allocations at $14.00, the underwriters' brokerage customers allegedly had to agree to purchase additional shares in the aftermarket at progressively higher prices. The requirement that customers make additional purchases at progressively higher prices as the price of Company stock rocketed upward drove the share price up to artificially high levels. This artificial price inflation enabled both the underwriters and their customers to reap enormous profits by buying Company stock at the $14.00 IPO price and then selling it later for a profit at inflated aftermarket prices. For more details, contact Anthony Vozzolo by Mail: 320 East 39th Street New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E- mail: avozz@faruqilaw.com or visit the firm's Website: www.faruqilaw.com NANOPHASE TECHNOLOGIES: Settles Securities Suit For $800T In Illinois --------------------------------------------------------------------- Nanophase Technologies Corporations (NASDAQ:NANX) entered into an $800,000 settlement in the securities class action filed against them for federal securities act violations. The U.S. District Court for the Northern District of Illinois preliminarily approved the settlement yesterday. The suit alleges that the Company, certain of its officers and directors, and underwriters are liable under the federal Securities Exchange Act of 1934. The defendants supposedly issued fraudulent material misstatements and omissions relating to the solicitation of consents to proceed with the Offering from certain of the Company's preferred stockholders. The settlement successfully resolves all claims against all defendants, without any admission of liability by any party. The settlement is subject to notice to class members and final judicial approval at a subsequent hearing currently scheduled for January 10, 2002. The Company asserted that the settlement has no material adverse effect on the Company's business operations or financial position. PNV INC.: Bernstein Liebhard Commences Securities Suit in S.D. NY ----------------------------------------------------------------- Bernstein Liebhard and Lifshitz, LLP initiated a securities class action lawsuit on behalf of purchasers of PNV Inc. (NASDAQ: PNVNE or OTCBB:PNVNE.OB) securities between November 24, 1999 and May 15, 2000. The case is pending in the United States District Court for the Southern District of New York and names certain officers and directors of PNV, as well as each of the underwriters of PNV's initial public offering as defendants. The complaint alleges that certain of the Company's executive officers and directors and the underwriters of their initial public offering misrepresented the capital and financing requirements of the Company in the prospectus distributed to investors. The complaint also alleges that the prospectus misrepresented that the proceeds of the initial public offering would be sufficient to fund the Company's rapidly expanding operations for at least eighteen months. The Company filed for bankruptcy approximately one year after the date of the initial public offering. For more information, contact Ms. Linda Flood, Director of Shareholder Relations by Mail: 10 East 40th Street, New York, New York 10016 by Phone: (800) 217-1522 or 212-779-1414 by E-mail: PNVNE@bernlieb.com or visit the firm's Website: www.bernlieb.com PURCHASEPRO.COM: Faruqi Faruqi Commences Securities Suit in Nevada ------------------------------------------------------------------ Faruqi and Faruqi, LLP initiated a securities class action on behalf of all purchasers of PurchasePro.com, Inc. (NASDAQ: PPRO) securities between July 19, 2000 and April 25, 2001, inclusive. The suit, filed in the United States District Court for the District of Nevada, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder. The complaint alleges that the defendants issued a series of false and misleading press releases concerning the Company's financial condition and business prospects. Specifically, the complaint alleges that defendants improperly recognized revenue in order to artificially inflate the price of the Company's securities for their own personal benefit. This practice caused the Company's common stock to be inflated, reaching as high as $44.95 per share, allowing defendants to sell millions of dollars worth of shares in personally held stock. However, the Company shocked the market when it announced that it expected first quarter results to be below estimates "primarily due to deferred recognition of certain license revenue." In response, the stock price plummeted approximately 35% in one day from $6.22 to $4.05, on volume of over 11 million shares. For more details, contact Anthony Vozzolo by Mail: 320 East 39th Street New York, NY 10016 by Phone: (877) 247-4292 or (212) 983-9330 by E- mail: avozz@faruqilaw.com or visit the firm's Website: www.faruqilaw.com QUIETFLEX MFG CO.: 80 Employees Allege Racial Bias in Texas Suit ---------------------------------------------------------------- The Mexican American Legal Defense and Educational Fund (MALDEF) has sued Quietflex Manufacturing Company, an air-conditioning duct manufacturing firm, in the U.S. District Court in San Antonio. The suit alleges that Hispanic workers are paid less than Asian workers and are prevented from transferring to better paying jobs in the company, according to a recent report in the Houston Chronicle. MALDEF filed the class-action lawsuit on behalf of 80 employees who work for Quietflex after the Equal Employment Opportunity Commission (EEOC) and Quietflex failed to reach a settlement agreement. Earlier, the regional EEOC had investigated the treatment of Hispanics at the company, a division of Goodman Manufacturing, after receiving complaints from 91 Quietflex employees. The agency found that Quietflex segregated Hispanic employees into lower-paying, less desirable jobs; denied them transfer to more desirable jobs and required them to read and speak English as a condition of promotion. Conversely, the Vietnamese employees were not subject to the English language requirements. After the talks between the company and the regional EEOC in Houston broke down, MALDEF, which became representative for the Hispanic employees when the decision to file a lawsuit was made, invited EEOC to join the lawsuit. However, that decision will have to be made at national headquarters in Washington. Dan Daniel, President and Chief Executive Officer of Quietflex, said he has not had a chance to read the lawsuit, but he is confident, nonetheless, that the court will find no basis for what he calls "groundless allegations." He said the company is willing to pay for English classes so that Hispanics will be eligible for supervisory positions, which must be filled by individuals with whom all employees can communicate. As to the allegation about wages, he said the company has boosted wages 20 percent to an average hourly wage of $13.37 an hour. SIRIUS SATELLITE: Calls Securities Suit "Frivolous" and "Without Merit" ----------------------------------------------------------------------- Sirius Satellite Radio, Inc denounced the securities class action suits pending against them calling them "frivolous and without merit, although the complaint was an entertaining piece of fiction." The suit, filed last month in the U.S. District Court in Burlington, Vt., alleges violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. The suit names, as defendants, the Company and: (1) David Margolese, chairman and chief executive officer, (2) Robert D. Briskman, executive vice president, (3) Patrick L. Donnelly, senior vice president and general counsel The Company and its top executives allegedly inflated the value of the company's stock by falsely claiming they were able to launch commercial satellite radio service by late last year. The lawsuit charges that between Feb. 17, 2000, and April 2, 2001, the company's management issued press releases and financial reports saying that Sirius would begin commercial service by the end of 2000 or early in 2001. The suit also alleges that the defendants knew all the while that it was impossible to complete the design and testing of chips for Sirius car radios until the company's satellites had been launched. Even after all three satellites were in operation, the Company issued press releases and reports saying that service would begin in early 2001. The Company's officers allegedly knew the final design of chips had been delayed and that manufacturers had not committed to building Sirius radios. In a statement, Donnelly said, "We have fully complied with all [Securities and Exchange Commission] disclosure requirements and will vigorously defend ourselves." A company's spokeswoman declined to comment further on the lawsuit. TURNSTONE SYSTEMS: Specter Roseman Initiates N.D. CA Securities Suit -------------------------------------------------------------------- Spector, Roseman & Kodroff, P.C. lodged a class action suit on behalf of purchasers of the stock of Turnstone Systems, Inc. (NASDAQ:TSTN) during the period from June 5, 2000 through January 2, 2001, inclusive including those who acquired their shares in connection with Turnstone's secondary offering on September 26, 2000. The suit was filed in the United States District Court for the Northern District of California against the Company and certain of its officers and directors. The complaint charges the defendants with violations of the Securities Exchange Act of 1934. The Company is a provider of technology for the digital subscriber line service industry. The Company's primary product is the Copper CrossConnect CX100, enables telephone access providers to remotely evaluate, manage, and control the DSL connections within the telephone routing system. This system permits identification of copper lines that are suitable for DSL and making installation and maintenance of DSL on those lines cheaper and easier. Turnstone's customer base consists almost entirely of Competitive Local Exchange Carriers, or (CLECs). The complaint alleges that, contrary to defendants' representations, the Company's CX100 product was fraught with problems, including blown capacitors, malfunctioning chips, and inaccurate calibration of the CX100. As a result, and contrary to the representations in the registration statement/prospectus, the CX100 product was unreliable, inaccurate and inefficient in deploying DSL services to the Company's customers. Moreover, their key customers were returning the product as a result of the malfunctioning of the CX100. In January, the Company warned investors that its 4thQ 2000 revenue would be "substantially below" market estimates because its CLEC customers had cancelled and reduced their orders. As a result, the Company announced revenue of $26 million to $28 million for the 4thQ 2000, 37% lower than consensus market analyst estimates. In the same press release, the Company also disclosed that it expected to take a $13.0 to $15.5 million charge to increase its inventory reserves and bad debt reserves. This caused the Company to forecast an operating loss of $12 million to $14 million for the quarter. For more details, contact Robert M. Roseman by Phone: 888-844-5862 or by E-mail: classaction@spectorandroseman.com or visit the firm's Website: www.spectorandroseman.com WIRELESS FACILITIES: Marc Henzel Commences Securities Suit in S.D. NY --------------------------------------------------------------------- The Law Office of Marc S. Henzel initiated a securities class action suit on behalf of purchasers of Wireless Facilities, Inc. (NASDAQ: WFII) securities between November 4, 1999 and December 6, 2000, inclusive. The suit, filed in the United States District Court, Southern District of New York, alleges violations of Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. In November 1999, the Company commenced an initial public offering of 4,000,000 of its shares of common stock at an offering price of $15 per share. In connection therewith, the Company filed a registration statement, which incorporated a prospectus with the Securities and Exchange Commission. The complaint further alleges that the prospectus was materially false and misleading because it failed to disclose, among other things, that: (i) the underwriter in the IPO had solicited and received excessive and undisclosed commissions from certain investors in exchange for which the underwriter allocated to those investors material portions of the restricted number of shares issued in connection with the IPO; and (ii) the underwriter entered into agreements with customers whereby the underwriter agreed to allocate Company shares to those customers in the IPO in exchange for which the customers agreed to purchase additional shares in the aftermarket at pre-determined prices. For more information, contact Marc S. Henzel by Mail: 273 Montgomery Ave., Suite 202 Bala Cynwyd, PA 19004 by Phone: (610) 660-8000 or (888) 643-6735 by Fax: (610) 660-8080 by E-Mail: mhenzel182@aol.com or visit the firm's Website: http://members.aol.com/mhenzel182 WINSTAR COMMUNICATIONS: Spector Roseman Initiates NY Securities Suit -------------------------------------------------------------------- Spector, Roseman & Kodroff, P.C. commenced a securities class action lawsuit on behalf of purchasers of the stock of Winstar Communications, Inc. (NSDAQ:WCII) during the period from August 2, 2000 through April 2, 2001, inclusive. The suit, filed in the United States District Court for the Southern District of New York, names as defendants, the Company and executive officers: (1) William J. Rouhana, Jr., Chief Executive Officer and Chairman of the Board of Directors, (2) Richard J. Uhl, Chief Financial Officer, and (3) Nathan Kantor, President and Chief Operating Officer, The complaint alleges that the defendants made material misrepresentations and omissions of material facts concerning the company's business performance during the relevant time. The defendants repeatedly assured investors that the company was performing well, that the company was enjoying strong growth, and that it was well-funded to follow its growth-oriented business plan through the first quarter of 2002. At the same time, however, the complaint alleges that the defendants knew or recklessly disregarded that the Company was overstating revenues and assets. In April 2001, contrary to prior representations, the Company announced that it was halting its expansion and laying off thousands of employees. The company has delayed the filing of its annual Report on Form 10-K with the SEC and its stock price has collapsed. For more information, contact Robert M. Roseman by Phone: 888-844-5862 (toll-free) by E-mail: classaction@spectorandroseman.com or visit the firm's Website: www.spectorandroseman.com ********* S U B S C R I P T I O N I N F O R M A T I O N Class Action Reporter is a daily newsletter, co-published by Bankruptcy Creditors' Service, Inc., Trenton, New Jersey, and Beard Group, Inc., Washington, D.C. Enid Sterling, Aurora Fatima Antonio and Lyndsey Resnick, Editors. Copyright 2001. All rights reserved. ISSN 1525-2272. This material is copyrighted and any commercial use, resale or publication in any form (including e-mail forwarding, electronic re- mailing and photocopying) is strictly prohibited without prior written permission of the publishers. Information contained herein is obtained from sources believed to be reliable, but is not guaranteed. The CAR subscription rate is $575 for six months delivered via e-mail. 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